Standard Chartered SME Index for Q4 2016 at 42.5 Business Confidence Edges up with Less Worry to Wind up

The “Standard Chartered Hong Kong SME Leading Business Index” (Standard Chartered SME Index) for the fourth quarter of 2016 has increased 1.4, reaching 42.5. Releasing the findings on 10 November 2016, the business confidence of local SMEs is gradually picking up as the Index continues the growth momentum in last quarter, rebounding almost to the first quarter’s reading. The improved sentiment is echoed by the finding that fewer SMEs see the bleak future of winding up as compared to half a year ago.

Sponsored by Standard Chartered Bank (Hong Kong) Limited (“Standard Chartered Hong Kong”), the quarterly survey features an Overall Index comprising five Sub-Indices. In this quarter, “Staff Number” (50.3) is the only Sub-Index that has dropped, though mildly. Nevertheless, it still stands at the 50-no-change mark - an indication that despite a low recruitment intention, SMEs tend to maintain the current manpower level in this quarter. The Sub-Indices for “Investments” (46.4), “Sales Amount” (41.1), “Profit Margin” (38.3) and “Global Economic Growth” (24.6) all go up; among which the “Global Economic Growth” registers a notable increase of 8.6. However, these four Sub-Indices are still far below the 50 threshold, reflecting the prevailing bearish business outlook.

Mr Kelvin Lau, Senior Economist of Standard Chartered Hong Kong, said, “Overall we expect the global growth momentum to remain weak, especially among developed markets. There is no crisis, but still there are many risk events on the horizon, and there seems to be a general lack of urgency on the part of policy makers to take decisive action to boost growth. This could keep SMEs cautious and economic activities modest in Hong Kong. Yet not all is lost. At least Asia, led by China, will likely to continue to outperform. Persistent low interest rates among major central banks also mean that market sentiment, in particular towards emerging markets, will remain reasonably well supported. With China stabilising further and the Federal Reserve pretty much done with hiking rates, we do think that there will be more support for local retail spending and investment going forward, and that 2016 should be the cycle bottom.”

This survey continues to track the views of SMEs on the market and economic changes, and the implications on their business survival. 73 of the respondents agree that Hong Kong is facing an economic downturn, among which 14 may consider winding up their business within one year if the sluggish situation is here to stay. The sentiment has significantly improved as compared to that of half a year ago. The last survey found that 90 of the surveyed SMEs agreed that the economy was going down, and nearly 20 in this group might consider winding up within one year if the situation dragged on.